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2019 (1) TMI 1050 - AT - CustomsValuation of imported goods - Hot Rolled Coils (HR Coils) - rejection of declared value - similar goods or not? - Revenue wants to enhance the declared value of HR Coils on the bases of alleged contemporaneous imports HR Plates - Rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Section 14 of the Customs Act. Held that - The valuation of imported goods is required to be done in terms of Section 14 ibid read with the Customs Valuation Rules, 2007. The transaction value of imported goods can be rejected only as per the provisions of Rule 12 ibid. As per Clause (iii) of explanation under Rule 12, if contemporary import of identical or similar goods is noticed at the higher price, invoice value can be rejected and same can be determined under Rule 5 to 9 of the Rules. The said rule 12 ibid provide for proper officer seeking clarification from the importer to provide further information to satisfy the correctness of the declared assessable value - In the present case, the respondents did submit the invoice, irrecoverable LC and supporting contract documents with reference to the impugned consignments. Nothing more is required with the importer to further substantiate the value. Merely because the assessee failed to submit any payment certificate or Bill of Exchange, the Assessing officer rejected the value declared by the respondent/assessee. The Assessing officer has to give valid reasons in order to reject the declared value and thereafter to proceed with the re-assessment, after due enhancement. Explanation (1)(i)(iii)(a) in Rule 12 appears to have applied by the adjudicating authority in the present case. As per case records, the assessing officer having noticed higher value of contemporaneous import of HR Steel Plates, raised the doubt regarding the correctness of declared value. The legal provisions mentioned in the Explanation clearly stipulates that the contemporaneous value should be significantly higher for identical or similar goods at or about the same time, in a comparable commercial transaction. We find in the present case due examination about this crucial aspect has not been done by the assessing officer and comparison based on the contemporaneous import is not proper. Whether the HR Steel Plates, with which the adjudicating authority has compared the HR Coils, are really similar goods in terms of definition of similar goods? - Held that - HR Coil and HR Steel Plates cannot be said to be similar or identical goods. If the revenue is rejecting the value declared by the respondent, then they are bound to prove beyond reasonable doubt that the goods compared with are similar goods or identical goods. In our view HR Coils and HR Plates cannot be termed as one and the same for the purpose of contemporaneous value. Both the goods are different in nature and therefore the values relied upon by the Department for enhancement of declared value is not legally sustainable. It is not the case of revenue that it is either a Hawala transaction or remittance of additional consideration by the respondent to the exporter, over and above the declared transaction value. The value declared by the respondent was to be remitted through the banking channel. The revenue has failed to establish its claim on the basis of contemporaneous import. The major factor which prompted the learned Commissioner to set aside the order-in-assessment passed by the Adjudication Authority was that in arriving at figure of US 460 PMT the Adjudicating Authority relied upon the value of import of HR Steel Plates and since HR Coils & HR Steel Plates are not similar, therefore there was no reason to doubt the truth or accuracy of the value declared by the respondent - the Adjudicating Authority has erred in rejecting the declared price/transaction value of the goods imported by the respondent by taking recourse to Rule 12 of Customs Valuation Rules, 2007. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Validity of the declared value of Hot Rolled Coils (HR Coils) based on contemporaneous imports of Hot Rolled Plates (HR Plates). 2. Application of Section 14 of the Customs Act, 1962, and Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. 3. Determination of whether HR Coils and HR Plates are similar goods. Detailed Analysis: 1. Validity of the Declared Value of HR Coils: The revenue sought to enhance the declared value of HR Coils based on contemporaneous imports of HR Plates. The respondent had entered into a contract with M/s. Severstal Export Gmbh, Ukraine, for importing HR Coils at a declared price of USD 400 per MT. The adjudicating authority doubted the declared value and reassessed it at USD 460 per MT based on the value of HR Plates, considering them similar goods. The Commissioner of Customs (Appeals) set aside this reassessment, accepting the declared price as the transaction value. 2. Application of Section 14 of the Customs Act, 1962, and Customs Valuation Rules, 2007: Section 14 stipulates that the value of imported goods shall be the transaction value, i.e., the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation. Rule 12 of the Customs Valuation Rules, 2007, allows the rejection of declared value if the proper officer has reason to doubt its truth or accuracy. The officer must seek further information from the importer and, if still in doubt, can reject the declared value and determine it under Rules 4 to 9. In this case, the respondent submitted the required documents, including the invoice, irrecoverable LC, and supporting contract documents. The adjudicating authority rejected the declared value due to the absence of a payment certificate or Bill of Exchange, which was deemed insufficient. The Commissioner found that the adjudicating authority did not properly examine whether the contemporaneous import of HR Plates was significantly higher and comparable. 3. Determination of Whether HR Coils and HR Plates are Similar Goods: The definition of "similar goods" under Rule 2(f) of the Customs Valuation Rules was crucial. Similar goods must have like characteristics, perform the same functions, and be commercially interchangeable. The Commissioner found no evidence that HR Plates and HR Coils perform the same function or are commercially interchangeable. HR Coils are used extensively in the auto industry and are subjected to cold rolling, while HR Plates are made to specific sizes and used for different purposes. The adjudicating authority failed to justify treating the two as similar. The Tribunal agreed with the Commissioner, noting that HR Plates and HR Coils could not be treated similarly, and thus no sufficient reason existed to doubt the declared value. Even if treated as similar, the adjudicating authority did not follow the statutory guidelines, such as considering differences in commercial levels, quantities imported, and the relationship between the importer and supplier. Conclusion: The Tribunal concluded that HR Coils and HR Plates are not similar or identical goods. The revenue failed to prove that the goods compared were similar. The declared value should be accepted unless valid reasons for rejection are provided, which were not present in this case. The appeal filed by the revenue was dismissed, upholding the declared transaction value of the respondent. Pronouncement: The judgment was pronounced in Court on 18/01/2019.
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